DEVELOPERS’ STRATEGIES IN DEALING WITH PLANNING CONTROLS: ITS
IMPACT ON THE URBAN HOUSING
Dr. Hajah Asiah Othman
Department of Land Administration and Development
Faculty of Science Geoinformation and Engineering
Universiti Teknologi Malaysia.
Abstract
The private housing developers who are now the main producer of housing in the
country, has been able to influence and shaped the urban housing. This has been
made possible through the strategies adopted in overcoming the problems and
constraints imposed on them, particularly in dealing with the application of
planning permission. The imposition of planning controls towards housing
developers in Malaysia has its implication not only in creating a good urban living
environment, but at the same it has some other drawbacks. Thus, it is the concern
of this paper to look into the impacts of the developers’ strategies on housing
development as it may have some implication towards the formulation of housing
policy for the nation.
1.0 Introduction
The issue of the impact of planning controls has long been raised in the literature and this can
be seen from the numerous studies that have been done, especially in the UK and the US.
There has also been a considerable amount of research which looks into the relationship
between the supply and price of housing and the operation of the planning system. Most of the
studies, however, have emphasized either the land market, or the housing market, or the
effects the planning systems has had on them. As revealed from the literature review, the
planning system has often been used in regulating housing production and controlling the
price of land and new housing. This is made possible as planning systems and building
controls restrict the quantity, quality, location and price of housing. In addition, the planning
system has often been used as a political intervention that aimed at allocating resources
effectively.
From the literature, it has been noted that planning in general has caused the land price to
increase. The theoretical literature supports the argument that planning restricts the amount of
land available and will thus push up land and house prices. In other words, the effect of
planning controls has been passed to the house buyers through the intermediary of the
developers (Bassett and Short, 1980). Besides the land price, the increasing cost of getting the
planning permission has also demanded the developers to quote a higher housing price, which
may or may not be absorbed by the market.
1
However, the planning controls imposed by the Local Planning Authority do not only affect
the price of the end product but it has some significant on the overall outlook of housing
development. This is partly due to the strategies and measures taken by the developers. The
behaviours of developers are to a certain extent affected by the planning controls as it has
influenced their interests and strategies. This is because they have to work within the
constraints in order to get the planning permissions. Nevertheless, developers have set up
strategies that enable them to minimise the impact which the constraints have on them.
2.0 Research Methodology
Based on the interviews with the developers that were willing to co-operate, an in-depth study
was carried out to provide detailed information regarding the strategies undertaken in dealing
with the planning controls. It is hoped that through the behavioural analysis the research can
achieve its main objective of looking at the effects of planning controls on the developers’
behaviour, which ultimately affects the supply of new housing in the area. The developers
involved are a subset of the larger group of the survey. They are developers who wished to be
interviewed prior to the completion of the questionnaire. Altogether there were twenty
developers, ten from each case study area, Kuala Lumpur (KL) and Johor Bahru (JB).
Even though the interview was based on willingness, it was found that all the interviewees
were amongst the well-established firms owned by shareholders of public listed companies,
who have been in the industry for more than ten years. This could eliminate the element of
bias, as the developers interviewed have been dealing with the planning authority for a long
time. As they have a wide experience in dealing with the planning application, these
developers can be considered appropriate. These firms are amongst private developers whose
projects mainly comprise large housing schemes involving a few thousand acres of land in
areas within and outside the case study areas.
The behavioural study focuses on the developers’ attitudes and opinions, which are gathered
through interviews, based on the interview agenda. The response from the interviewees was
good in that it enabled the study to gain more detailed insights regarding the problems. The
qualitative analysis was done based on the developers’ views and opinions on certain issues.
Whenever necessary, a quotation from the developers was inserted and this provides
supportive evidence in relation to the issues.
The qualitative analysis starts by looking at the major issues or problems faced by the
developers in KL and JB. Eventually, the study will tackle the ways of how and why the
developers react to the problems, i.e. the strategies they adopted to overcome problems. In
other words, the study looks into the ways in which the agent, namely the developers, react to
a part of the “structure”, that is planning controls. Consequently, the study tries to reveal the
effects of the rules and regulations in the planning controls on the interests and strategies of
housing developers in housing development.
2
3.0 Major issues in the process of planning application
Besides the issues of getting a suitable land for development, the developers from the survey
revealed their business undertaking are getting more and more risky, due to the uncertainty in
the rules and procedure as well as the increasing cost in dealing with the application of
planning permission. Some of the major issues raised by the developers are the on-going
problems of planning delays, the changing rules, regulation and requirements, as well as the
ever-increasing cost of getting planning approvals.
The problems mentioned may not be new as it has been voiced out by the private developers.
However, the problems still persist and the developers are expected to deal with the problems
accordingly. Some may have a very systematic approach while others may have been affected
and could no longer be active in the industry. This will automatically reduced the number of
developers involved in housing industry which will then have some impact on the housing
outcome.
In dealing with the constraints and problems in getting planning permission, most developers
have set up their strategies that could guarantee favourable and fast approvals. The strategies
adopted may differ from one firm to another and from one project to another. However, it
should be noted that the developers’ strategies normally aimed at giving the highest return to
the developers, as they are the profit-motivated company.
3.1 Developers’ strategies to overcome planning delays
The delays perceived by the developers may not all be considered as delays by the approval
authority, as the Local Planning Authority does not include the time taken for the amendment
to be made. Such cases have to be put aside and be considered as KIV, until the applicant has
done the corrective measures. Unlike the approval authority, the developers have the
perception that the delays are reflected by the total time taken for any application to get the
approvals. Thus, a case may be considered delayed by developers but not to the approval
authority.
In avoiding the delays, developers will try their best to ensure the application goes smoothly
from the very beginning of the submission. In general, there are seven common methods that
have been used by the developers in both areas in confronting the problems of delays. These
include actions such as the ‘follow-up’ method, ‘rent-seeking’ behaviour, compliance,
appointing consultants, role of ‘runner’, establishing good relationships, negotiations and
having a good record.
However, the ‘follow-up’ method seems to be the most important one and according to a
developer:
“To avoid the delay, we must make sure that the document doesn’t sit on the
desk for two weeks before you start looking at it. They look at it on the day you
submit it and keep looking at it until it’s approved.”
DKL5
3
The ‘follow-up’ normally requires a ‘runner’ whose job is only watching very closely where
the file goes. He is responsible for giving first hand information about the file and in doing so,
he must establish a very good relation with the staff in the authority. Due to that, some firms
may appoint a ‘runner’ amongst the people who have worked for the authority. This could be
a valuable asset to the firm because as ex-staff, he has maintained a good relationship and he
is also familiar with all the procedures. The work of ‘follow-up’ goes from the bottom to the
top level. It is for this reason that contacts with persons who handle the files are necessary.
One of the developers said:
“The ‘runner’ as far as possible has to have contacts with the person who
handled the file. A boss in the government service will not direct the staff to do
the work now as in the private sector. Thus, it is much better if you get to know
the person in charge and deal with him straight away.”
DJB4
Besides the ‘runner’, the developers also recognise the importance of the top level or the
firms’ executive to establish a good relation with the authority. However, the role of the top
level could be minimised if all the procedures and requirements are appropriately followed.
As confirmed by one of the developers:
“You need a very good relationship. Sometimes big bosses have to go out to
the field, to assist the staff who have done the groundwork. PR plays an
important role especially when everything is OK already, there’s nothing that
can stop you. May be just a courtesy visit by the top level can solve a lot of
problems.”
DKL4
The developers, in submitting the application, must also ensure that they comply with all the
requirements of the planning authority as well as all the other technical departments. To the
approval authority this can be the most important element, and the developers will try their
best to fulfil the requirements or comply, as non-compliance means delay, but there are
certain limits to what the developers can comply with. This has been pointed out by one of the
developers:
“We have to compromise somewhere. From the developers’ point of view,
profit is important especially when it involves a very high land cost. You want
to use up every inch of the land if possible. But the authority has its own
guidelines which we have to follow. But I think both parties have to
compromise somewhere. I mean you cannot impose all these very idealistic
rules on developers when they are paying millions of dollars for a piece of
land. Only to a certain extent can the developers comply; beyond that there’s
no point for them to dump the money.”
DKL5
In relation to compliance, developers normally engage planning consultants who are experts
in this field. It is hoped that the planner can really assist them in preparing the layout that
fulfils the requirements which ensures fast approvals. However, some developers are still in
doubt about the role and the importance of the planning consultant as according to them:
4
“A good planner will help a lot in the layout especially for the township. His
role is important but we have to tell him what we want. With respect to followup, quite often clients i.e. developers have to pursue it. It’s the developer’s
money, so you are more definitely concerned about your own money than
other people are. So the developer’s side does the follow-up.”
DKL5
In other words, the developers do not believe that a planning consultant can ensure getting fast
approval. This is because, as a consultant, his main concern is to prepare as many layout plans
as possible and not to deal with the local planning authority. Another developer added:
“If you want to get the approval fast, you fulfil or satisfy what they want and
the planning consultant should be able to help you with this. But as a
developer you should know where you stand. They are the owners and the
masters of all the consultants. You need to be above the consultant. You need
to be the masters but now we can see that a lot of developers have to listen to
the consultant rather than the developer dictating to the consultant. As for our
company, we try to have a good relationship with all the consultants but in the
meantime, we are the masters of them. Therefore when we instruct, we insist
on getting it done, completed and back to us within the time given.”
DKL1
Thus it is clear that most of the developers try to avoid the delays by doing a close ‘followup’, whether by appointing a ‘runner’ or by establishing contacts with the authority. Besides
that, the developers admit the importance of complying with the requirements. But certain
requirements are negotiable that allow developers to come up with other alternatives. The
negotiation may be time consuming but the waiting can be very worthwhile, especially when
the developers succeed in increasing the number of houses allowed to be built. However,
there are cases where the proposals are turned down.
According to the developers, even though they have complied with the requirements, the
approvals are still beyond the time range. In tackling the issue of delays, one should consider
whether or not ‘rent-seeking’ behaviour (Bramley et al. 1995), applied in the case study areas.
This includes expenditure spent by the developers on the planning authorities such as
lobbying, entertaining and so forth with the hope of getting a fast and favourable approval.
The developers admit that ‘rent-seeking’ behaviour is applicable, especially at times when
urgency is badly needed. According to a developer:
“That’s normal, we have to go out of our way in order to gain fast approvals.
There are other ways to get fast approvals, but at the end of the day that’s the
same thing. Normally, people will do that at the beginning but some with good
connections, after getting approvals, get their part. But it can come in many
different forms, satisfaction and money matters.”
DKL1
5
Another developer agrees with the need for ‘rent-seeking’ behaviour and said:
“Sometimes you really have to jump the queue i.e. to rush things out. Although
at the end of the day all will be complied with, but sometimes we have to be
one step ahead.”
DKL5
As mentioned earlier, developers will go all out just to get fast approvals and they will use
various means to satisfy the authority. Besides doing the necessary follow-up, some
developers try to satisfy each individual whether in the form of money or other personal
satisfaction, which others may not agree with. From the interviews, it was noted that there are
some developers who feel that individuals can never be satisfied, so it is better to approach the
authority as a whole, such as giving donations to the Workers Club. Nevertheless, according
to the developers, the amount of money they spent on this is minimal in comparison with
other development costs. They are always prepared for this and consider it as part of the cost
of the development. They would rather pay for the cost in ‘rent-seeking’ as what is more
important to them is the fast approvals. This is particularly true to developers who always
have the perception that time is money. But how far does ‘rent-seeking’ behaviour guarantee a
fast approval? One of the developers answered:
“Not necessary. I think what is more important is to build up relationships,
sometimes just to make friends, give them a treat, and all this will make them
recognise you. Once your file goes in, you can just give a call. Keep it as a
personal contact, as a friend, and the closer the friendship the faster your plan
will be processed.”
DJB4
There is doubt that ‘rent-seeking’ applies in the context of getting fast approvals, as not all
developers are going for that. From the interviews, the developers in KL are more likely to
apply ‘rent-seeking’ behaviour than the developers in JB. This is because the developers in
KL do admit that the ‘rent-seeking’ behaviour has become a tradition. This could be one of
the factors which could expedite the process of application in the DBKL. In JB, developers do
not rely much on ‘rent-seeking’ and the planner himself admits this. Thus, every application is
treated the same and undergoes all the stages prescribed in the procedure. The developers are
aware of this and therefore they are more concerned with compliance rather than ‘rentseeking’ behaviour.
There are also developers who are willing to make an offer to the planning authority, such as
more low-cost units. Most developers are quite reluctant to fulfil the requirement on low-cost
housing, but certain developers, whose projects are not within the town centre, are willing to
make an offer. It is hoped that with such an offer, the authority would easily grant the
permissions. Once the developer has made such an offer, he has established a good record
with the authority and this will in a way brighten his future undertakings. In this case the
developers admit that an established firm, which has a good record in the past has some
privileges in gaining fast approvals. Such an offer could be considered as a form of ‘rentseeking’ behaviour as described above.
Thus there are various ways and means which the developers adopt to overcome the delay. As
time is so important, the developers will do their best to get the approval as soon as possible.
6
In relation to that, normally developers will try their best to satisfy the approval body, so long
as it does not affect the viability of a project. In order to gain fast approvals, developers have
to comply with all the requirements and follow the rules and regulations as well as fulfil the
policy imposed by the state government.
However, as revealed by the planners, the issue of delay concerns both the authority and the
developers. The developers have to take the necessary steps to ensure that the plans submitted
are complete. On the other hand, the planning authority should consider replacing the clients’
charter or the administrative time frame with a statutory or legal time frame. Mohd. Anuar
(1994) suggested that the legal time frame is more effective as it allows the applicant to make
an appeal if the decision is not made within the legal time frame.
The DBKL and MBJB have also made it clear that the developers have to conform to the
specified planning standards before any planning permission can be granted. For this reason,
developers need to consider planning standards and other requirements by the technical
departments as well as the housing policy, as these have an effect on the outcome of the
projects. Furthermore, these requirements are sometimes very costly and might cause the
project to be no longer viable. Thus, planning requirements do have some effect on the
developers’ behaviour as they affect their profit earnings from the project.
3.2 Developers’ strategies to overcome the problems of fulfilling the planning
requirements
Developers have to satisfy or fulfil all the requirements in order to get fast approvals. One
developer interviewed admitted:
“We try not to cut corners because, if you have complied fully, then they have
no reason for the delay, unless you try to avoid whatever regulation and rules,
to get an easy way out and to save cost.”
DJB8
But there are certain requirements that developers are quite reluctant to meet as they involve a
big sum of money. As an alternative, the developers most of the time will approach the
authority and negotiate and rationalise their proposals. In doing so, they have to provide a
very convincing report from a consultant, giving a justification why such a requirement could
be replaced. Negotiation and discussion over the matter is time consuming, as the developers
have to come up with a very strong and good justification. The authority on the other side has
to make a detailed study revising again the requirement that has been imposed and to study
the outcomes in the future if the requirement is not provided.
However, as time is so important to developers they normally get advice from consultants
who are familiar with the requirements imposed by the authority. They will work on the
requirements and will consider them in their viability studies. So whatever cost they may
incur in the provision of planning requirements and the contribution fees that are needed will
be taken into account. If the project is still viable, then the developer will proceed and if not
the developer will have to stop it. This is because the developers understand that the authority
normally insists on developers complying with these requirements that are being imposed.
7
Even though negotiation is allowed, it normally takes quite some time before a decision can
be reached and to the developers time is very important. Due to that, they would rather fulfil
the requirements or discontinue with the project, if it is no longer viable.
Thus, the developers normally rely on the feasibility of a project, including all the possible
costs that they are going to incur in the process of development. The project is still viable
provided the market can accept the higher selling price of the completed units. In relation to
this, the developers revealed that the market in the case study areas was good and there is still
a high demand for all types of housing (but, it is not always the case as the down-turn of the
economy in mid-1997 badly affected the property sector, including housing). Furthermore, the
public, especially the high-income bracket, demands better quality housing in terms of
facilities provided, materials used and a good surrounding environment.
But to the house buyers, they will only agree to pay for the extra costs provided the facilities
and the infrastructures bring some value or benefit them. As one of the developers in the
interview revealed:
“Our standard of living becomes higher and higher, due to which we have to
upgrade the quality of houses by putting in better materials and some
attractive features. Thus, the increase in price is not only due to the
constraints imposed by the authority but also due to the expectations of the
public. Therefore, house prices are becoming higher as the standard of living
is getting higher.”
DJB8
This provides alternatives to developers in dealing with the extra costs that they have to incur
due to the requirements imposed by the local planning authority. If the infrastructure or the
facilities provide something of value to the end-user, the developers can pass on to them part
or all of the costs.
In relation to the amount of contribution fees paid to the utility bodies, the developers under
their association the REHDA are trying hard to discuss the matter with the Ministry of
Housing and Local Government. They really feel they should not be burdened to allocate and
provide facilities to the utility bodies as these bodies are all privatised and are making money
in return for the services given to the public.
From the interview, it is clear that fulfilling the requirements imposed by the planning
authority and the other technical departments is one of the items that added to a higher cost of
development, besides the increasing cost of labour and cost of material. Thus, the increasing
cost comes from all factors of production and for that reason, developers have to set up their
strategies in dealing with the higher costs of development.
3.3 Strategies in dealing with the increasing costs of development
As profit-oriented bodies, developers in running their business will as far as possible try to get
the best returns from every project that is launched. However, their returns are affected by the
increasing costs mentioned in the previous sections. In ensuring a good return, the developers
8
in KL and JB have adopted various strategies in their project implementation. These strategies
will either aim at minimising the cost of development or optimising their land use in order to
get higher returns. With these strategies developers try to absorb part of the increasing cost
and not just simply add the extra cost to the end product. As clarified by a developer:
“Of course this will lower our profit margin. But then we will work out, taking
away all the land required as well as the cost to be incurred, and see whether
we still have a profit. So we work out before we acquire land and a viability
study will decide. But then we have to adjust ourselves. We go for higher
density. For example, we can, instead of building terraced low-cost units, go
for high rise, a higher density type of development.”
DJB2
Another developer supported this view and said:
“As a businessman, a developer is profit-oriented and knows better how to
optimise the land. This means that even though he has to follow the
requirements, surrender part of the land, the layout is done in such a way that
can maximise his returns.”
DKL2
The above quotations show how developers try to optimise their land usage in order to get the
highest returns. By adopting a vertical development for the low and middle-income housing,
the developers have more areas to accommodate housing for the high-income group, thus
giving a bigger detached plot. With a bigger area, the detached type of housing will then fetch
a higher selling price. Furthermore, a higher density type of development allows them to
construct more housing units for the low and middle-income groups. Thus, even though cost
is increasing they can still maintain the profit, as a higher return is expected from the higher
selling price of the detached plots and the increased number of units for the low and middleincome housing.
The other alternative considered by the developers in minimising the cost of development is
to get land at a lower price. This means that they have to go outside the central area of KL and
JB, concentrating on sites with a high development potential but offering a lower land price.
Being located at the urban fringe with agricultural land use, the developers can easily bought
over those estates as their land banks. Most of the developers in the case study areas are
concentrating on land which they bought 3-4 years ago and which is currently at the
implementation stage. This strategy could lower their initial cost of acquiring land.
As the projects involve thousands of acres of land, developers normally phase the
development and this is also one of the ways which developers use to minimise the cost and
maximise the returns. According to the developers, phasing can help in ensuring good returns
as well as a good cash flow. As one of the developers suggested:
“We have to study the demand phase by phase. Normally at the first phase, we
don’t launch the expensive units, but consider the ones, which can attract
people. Create the community and after the community exists, then it will form
a neighbourhood. Then the price of housing will automatically increase, each
phase year by year.” DJB9
9
Another developer added:
“In phasing, first we consider the economy i.e. the project viability and the
buying power of the end user. We don’t develop or sell a product that we
cannot sell. Second is the cash flow. When you want to do phasing, you have a
combination of residential development, low, medium and upper and you have
commercial ones, shops and offices. Any areas when you start with
commercial people won’t buy, because when they buy, the next thing they will
ask is, who would want to rent my shop, or if I want to run a business, what
kind of business would that be since there are no people in the area.
Therefore, when we first develop, we bring in the people. To bring in people is
to provide them with homes.”
DKL2
Another developer agreed and clarified:
“Phasing is applied in order to gain capital. Because of that, the first phase
needs to be profitable and successful. That will allow us to inject some of the
profit into the second phase. This means normally at the first phase we launch
housing of medium-cost that is double-storey terraced, then followed by lowcost and several commercial developments in the second phase.”
DKL1
Phasing the development, can also strengthen the company cash flow, as cost at the initial
stage can be minimised, and as suggested by one of the developers:
“Developers can minimise cost through phasing by concentrating on sites
which incur less cost first. We develop sites nearer to the existing
infrastructure as the cost in connecting can be lowered. For example, we
normally develop areas nearby the oxidation pond and water tank and then
proceed to sites further away later.”
DJB2
Through phasing the developers ensure a high selling price. As a marketing strategy,
developers will phase their project and sell their units when the demand is high. As mentioned
by the developer before, the prices of the finished products are getting higher and higher by
the time the whole project is fully completed. On the other hand, the market can still accept
the high price as the housing environment is better, complete with all the facilities and
services. Besides that, there are also developers who make sure that their project is not
launched at the same time as another developer, especially with a developer who has
established a good name in the public eye. Competition with them will only create problems
on their part as they can hardly sell their product.
Thus, developers use phasing in ensuring their cash flow, by selling early units that give a
rapid turnover. Furthermore, the planning authority does not intervene in the phasing of the
development, provided the developers have fulfilled all the conditions attached to the
approvals. This means that conditions such as the construction of low-cost housing and the
construction of flyovers, interchange and new roads (whenever they apply) should be met, but
can be provided at a later stage of the development. Other than that the developers are entirely
10
left on their own. However, developers consider marketability as the most important factor,
followed by their cash flow and profit projection. In other words, the demand factor plays an
important role in determining what sort of development should go first. This is to ensure that
there will be an inflow of income for the developers. This is particularly important when high
capital is needed in fulfilling the requirements such as the construction of flyovers,
interchanges and new highways.
Besides that, the cost factor is also considered. Developers will normally concentrate on areas
which are less costly to develop such as areas nearer to the main road or sites located near the
amenities that have been provided. This means that the physical factor is also taken into
account and sites which have more problems are left to later stages as they involve a higher
cost. In relation to phasing a developer (DKL1) suggested that it is only applicable to sites
with an area of more than 100 acres and the developers need the capital from the cash flow to
construct houses in the later phases.
The increasing costs of development due to the imposition of planning requirements and other
costs of planning (which include the ‘rent-seeking’ behaviour, cost of delays and the direct
cost of administration) as described earlier, do affect the developers’ behaviour in the housing
development. This could be seen from the developers’ strategies in dealing with the various
problems. The qualitative analysis of the study revealed that the developers in KL and JB
have employed various strategies that could either absorb the increasing cost by imposing it
on the end-user or the landowner, or by spreading it out evenly through a proper phasing of
the development.
4.0 The effect of the developers’ strategies on housing development
The research revealed that the housing industry in the case study areas is dominated by public
limited companies. This has been confirmed from the surveys, as the majority of the
developers came from large public listed companies, owned by shareholders. Fernandez &
Singh (1993) observed that a large number of public companies are attracted to the short-term
profits of the industry, and many of them move easily into the sector in the guise of
‘diversification’. Moreover, the existence of well-established developers in the housing
industry is needed in order to cope with the structural constraints imposed by the government.
Tan (1996) also noted that besides having complied fully with the technical requirements of
the various government authorities, developers need someone, probably the project manager,
who will exercise their public relations skills in lobbying and expediting approvals. Large
developers that normally have established ‘relations’ would certainly continue by initiating
several lobbying campaigns, such as entering into a Memorandum of Understanding as one of
their strategies for getting approvals. Such a strategy may not be possible for the small
developers, and the study confirmed that the majority of the developers are amongst the wellestablished firms that have been in the business for more than ten years.
The study reveals that housing developments are becoming more ‘facilities conscious’ where
a lot of new concepts of residential amenities, such as a clubhouse and various kinds of
playground facilities have been introduced. A developer pointed out that the house buyers are
currently not only buying houses for shelter but they also want an environment for good urban
11
living. This means that a housing scheme should be fully equipped with related facilities such
as a community hall, playgrounds, a hawker centre etc. These facilities are, however, in
accordance with the planning requirement specified by the planning authority.
Developers in KL and JB are willing to provide all the facilities required, not only to fulfill
the responsibility, but also at the same time to enhance the market value of the finished
product. In other words the developers can also get the benefit from planning requirements as
imposed by the planning authority, as the completed units can be sold at a higher selling price.
The facilities consciousness is even more obvious for the developments of condominiums in
the case study areas.
The role of professionals such as the planning, architect, valuation and engineering consultant,
has been increased due to the new ruling made by the approval body that requires the
submission of technical reports prepared and signed by consultants. Such reports include the
Transport Impact Assessment (TIA), Environmental Impact Assessment (EIA), Geo-technical
Report as well as the Development Proposal Report (DPR).
In fulfilling the new ruling, the developers have to engage with planning consultants to
prepare the development proposal report and the layout, and submit the application.
Developers, being the clients, may benefit from proper professional advice during plan
preparation, and it is an advantage to developers if they can appoint a planning consultant
who is locally based, as the latter will be familiar with the procedure and requirements of the
particular planning authority. But, the professionals fees paid will have some impact on the
total cost of development that may be transferred to the end-user.
5.0 Implications of the findings
A brief conclusion that could be made from the previous discussion is that planning controls
in KL and JB have influenced the developers’ interests and strategies. In turn, this has
implications on the housing stock available in the market and at the same time affects its
price. Even though there may be differences in the planning regime between the two areas,
KL and JB, the developers revealed that they are facing similar problems that need to be given
particular attention. The problems of planning delays and increasing cost have to be given
special attention as these have implications on the housing stock and housing price.
Developers in KL and JB have commonly accepted the problems of delays in the planning
process and according to them, even though they are unavoidable they need to be tackled so
as to reduce the period of the delays. To developers, delays in getting planning permission
have implications in their business undertakings and on the overall cost of development. A
speedy planning permission has to be secured in order to catch high returns during the
property boom. On the other hand if delays persist the benefit could be missed. Besides that,
the cost of development may rise because the period for which interest charges have to be
paid on borrowed capital is extended (Ennis, 1996).
Delays to a certain extent can be reduced. Besides conforming to all the requirements and
housing policies, the developers have adopted other strategies such as follow-up by the
‘runner’, establishing relations and appointing the best planning consultant to deal with the
planning application. Developers are aware that all the requirements should be fulfilled and
12
the procedure should be followed. Nevertheless, there are limitations on the part of
developers. Certain requirements are very costly that may cause the project to be no longer
viable. As such, developers have to appeal or try to negotiate with the local planning authority
and this is where time is very crucial. The process of negotiation has been known as time
consuming and the outcome can hardly be predicted. Thus developers have to decide whether
to incur the cost of delay or to bear the cost of fulfilling the requirement. In certain
circumstances, the developers may consider to forget the intention of developing the sites.
The imposition of a new requirement, such as the preparation of reports, may have a good
intention. But, this will only add more cost to the development. Services of professionals do
not come free, so developers have to pay a certain amount of professional fees and these will
be included in the total cost of the development. Thus the developers felt that this requirement
should be made more flexible as it has implications in the cost. Thus, the good intentions of
ensuring proper development result in increasing costs.
In most cases, developers will consider planning constraints as part of their cost. All the costs
and fees associated are considered as a price to be paid in securing the planning permission.
Developers have to pay contribution fees to utility bodies as well as incur all the costs in
providing infrastructure and other public amenities as required by the planning authority.
These are considered by planners to be the developers’ responsibility, as the needs are created
by the impact of the development. Even though developers understand the rationale behind
the requirements to provide these facilities, there are some controversies and arguments
amongst the developers with regard to fairness.
From the above discussion it is clear that the developers’ strategies in dealing with planning
systems and development controls affect the outcome of housing production in the case study
areas. Developers’ decisions in the development process have a great influence on the
situation of housing especially in the case of Malaysia where developers are the sole
producers of housing for the nation. Bearing this in mind, the research findings do have some
implications for housing policy.
6.0 Some implications for future housing and planning policy
This section will outline briefly some of the implications, which could be dealt with by
various parties or government agencies. As mentioned earlier, there are two main issues that
arise from this study of the developers’ behaviour in the area of KL and JB.
The delays in getting planning approvals have often been argued by the developers, but the
study reveals that the delay according to the developers may not be considered delay by the
planners. The planners will only process the applications that are complete and conform to all
the requirements. The incomplete and non-conforming applications will not be processed until
the applicants have made corrective measures. Thus, the delays occurred not only because of
the heavy workload on the part of the planning authorities, but also due to the developers'
fault.
With regard to delays, there are already numerous efforts to shorten the time taken for the
planning application, but the delay still persists. Nevertheless one alternative that should be
13
seriously considered is the application of computers in the process of approvals.
Computerising the information and streamlining the approval procedures can do this. This
would enable the various departments involved in the approving process to have instant
access to information on the status of any project (Chan, 1997). It is believed that computers
could shorten the application process but a large capital outlay is needed for their installation.
Coordination among the related agencies and inter-institutional mechanism has to be
established to improve the whole system of planning approvals.
Besides that, planning applications should be processed within the local planning authority
itself. Matters relating to infrastructure requirements should be handled within the local
planning authority. This is possible with the establishment of divisions or units that are in
charge of looking at the infrastructure provision such as water works, roads and electricity.
This could really expedite the process as every application is considered in one meeting and
decisions can be made straight away.
Another important measure that could be used in tackling the problems of delay in the
planning process is to provide adequate and correct information to the applicant. Sometimes
requirements and planning provisions are not very transparent and developers have to
interpret them accordingly. Marbeck (1997) noted that there are cases where the planning
authorities do not reveal the actual planning provisions. Instead they tend to keep the
information secret, or to reveal only some part of it, or even none at all. This is not a
favourable condition to work with, especially at times when every piece of information has an
effect on the final outcome. Thus, the local planning authority should make sure that the
applicant or developers in this case are well informed. In the interviews, a developer
suggested “the local planning authority should play a judicious role and think of the
developers and should not act authoritatively, treating the developer as an outsider” (DJB3).
On the part of developers, regular checking with the authority is worthwhile, especially at the
time of preparing the development proposals.
Finally, the government should look into the problem of increasing costs. As revealed from
the findings, developers have the perception that planning requirements affect the total cost of
development, which has to be considered at the early stage of determining the viability of a
project. Even though there is an increase in cost due to the imposition of certain requirements,
the project can still be viable provided the market can accept a higher selling price. Indirectly,
it can be said that the increasing cost in fulfilling the planning requirements has pushed up the
house price. Particular attention should therefore be given in addressing this issue of high
house prices due to the imposition of such requirements.
Another aspect that needs to be considered is regarding the payment of contributions to the
privatised-utility bodies. Under the current system developers not only have to surrender part
of their land to the utility bodies but also have to pay some contribution for the purpose of
future maintenance. However, it has been argued that these bodies have been privatised and
should be able to bear all the utility costs. This means that infrastructure costs in the
development process should be absorbed by other parties such as the utility bodies. However,
this issue has not been resolved. Further research needs to be done looking at the
appropriateness of requiring the private sector to bear all the cost of providing infrastructure.
14
7.0 Conclusion
The behaviours of developers in KL and JB are to a certain extent affected by the planning
controls. The planning controls imposed on the developers have influenced their interests and
their strategies. This is because they have to work within the constraints in order to get the
planning permissions. Nevertheless, developers have set up strategies that enable them to
minimise the impact which the constraints have on them.
As far as the developers are concerned, they have made various attempts to ensure the
application is being processed. This includes the ‘follow-up’ strategy, either by appointing a
‘runner’ or establishing good relationships with the planning authority. In certain
circumstances, developers may adopt the ‘rent-seeking’ behaviour which has been found
more successful for the developers in KL than in JB. All the measures adopted by the
developers will have to be borne either by the developers themselves in terms of a reduced
profit or the end-user in the form of a higher house price.
To overcome the problem of increasing costs of development, the interviews with the
developers revealed that developers adopt strategies of optimising the land use and phasing
the development. These strategies help them to ensure a high return and good cash flow. But
the findings reveal that in certain circumstances developers may get trapped and this is due to
sudden changes in government policy and the imposition of new requirements. In such cases,
developers have to absorb the cost and this will certainly affect their profit margin. Hence, the
developers suggest that any changes should have a long-term view and not be only to solve
certain problems. The changes, therefore, should be properly researched and justified.
As the producer of housing for the mass, the developers are not only shouldered the
responsibility on behalf of the government, but are also taking the opportunity in the housing
industry. A profit-oriented body such as the developers firm could not perform without any
expectation of high returns. Hence the developers in Malaysia have to score both goals;
providing the housing stock for the people as well as securing the company’s profit. But does
the environment allow them to meet both ends?
Since they are the main supplier of housing in Malaysia, the developers can therefore capable
of shaping the urban housing. Their existence in the housing industry should be recognised as
their actions and strategies can have some impact on the housing scenario. The government on
the other hand should realise the important role played by the developers and their
contribution in providing housing for the nation. Due to that, the government or the authority
concerned should be working hand in hand with the developers in order to realise the housing
programmes. The developers should be treated as their counter parts in realising the
government’s policy in providing housing for the nation.
15
REFERENCES:
1. Bassett, K and J. Short 1980 Housing and Residential Structure: Alternative
Approaches. Routledge, London.
2. Bramley, G., W. Bartlett & C. Lambert 1995 Planning, the Market and Private
Housebuilding. London: UCL Press.
3. Carter, N., T. Brown, T. Abbott 1990 Policy Planning: One step forward and two steps
backward? The Planner 76(48), 9-12
4. Chan, Lawrence 1997 Government Housing Policies and Incentives- The Industry
Viewpoint. Paper presented at National Housing Convention. 26-27 May 1997,
Kuala Lumpur.
5. Ennis, F. 1996 Planning Obligations and Developers. Town Planning Review 67(2),
145-159
6. Marbeck, A. B. 1997 The Legal and Administrative Framework for Promoting
Healthy House Development and Housing Finance: The Private Sector Viewpoint.
Paper presented at National Housing Convention. 26-27 May, 1997. Kuala Lumpur.
7. Mohd. Anuar, A. Wahab 1991 A Comparative Study of Development Control System
in Peninsular Malaysia and England; Case Studies: Johor Bahru and Doncaster.
Unpublished MA Dissertation, University of Sheffield
8. Tan A. L. 1996 Project Management in Malaysia. A Conception Approach for
Successful Management of Property Development Projects from Inception Until
Completion. Synergy Books International.
16